Tuesday, January 8, 2019

HAL Will Share Copter Deal Proceeds With Joint Venture Partner

HAL Will Share Copter Deal Proceeds With Joint Venture Partner

Sitharaman said that an order for 200 Kamov Ka-226T worth a tentative Rs 20,000 crore is among projects in the pipeline for HAL. However, as Sitharaman herself noted, HAL as a company will not be getting the entire order for the 200 helicopters. Even as price negotiations for it are ongoing, this order is going to an independent joint venture (JV) in which HAL has a 50.5% stake

BANGALORE: Even as the political debate on the orders signed with defence PSU Hindustan Aeronautics Limited (HAL) and those in the pipeline with the government continues, clarity on how much of the Rs 73,000 crore listed by Nirmala Sitharaman in Parliament on Monday will go to HAL remains unclear.

Sitharaman said in Parliament on Monday that an order for 200 Kamov Ka 226T worth a tentative Rs 20,000 crore is among projects in the pipeline for HAL, that is, at the Request for Proposal (RFP) stage.

However, as Sitharaman herself noted, HAL as a company will not be getting the entire order for the 200 helicopters. Even as price negotiations for it are ongoing, this order is going to an independent joint venture (JV) in which HAL has a 50.5% stake. This company was set up in May 2017.

MoD Confirms JV

The MoD in its written statement to the Lok Sabha on March 28, 2018 had confirmed the formation of this JV: Indo Russian Helicopter Private Limited (IRHL).

In his reply, junior defence minister Subhash Bhamre, said: “IRHL has been incorporated as Joint Venture (JV) cum subsidiary in May 2017 between HAL, Russian Helicopters and Rosoboronexport, with the objective to manufacture Ka-226T helicopters in India.”

The JV will have an authorised capital of Rs 30 crore with a paid-up capital of Rs 10 crore. “The JV has 50.5% shareholding by HAL, 42.5% by Russian Helicopters and 7% by Rosoboronexport,” Bhamre said.

“The orders for the Kamov helicopters will go to IRHL and reflect in its books. If anything, as a stakeholder, HAL will only get dividends from the business the firm does just like Russian Helicopters and Rosoboronexport would,” an HAL official said.

A specific query from TOI on the matter did not elicit a response from the MoD.

LCA Final Price Unclear

Among other projects in the pipeline mentioned by Sitharaman is the order for 83 Light Combat Aircraft (LCA) Tejas aircraft, which is to be worth Rs 49,797.5 crore. Of this, Rs 432 crore goes for two simulators, while another Rs 300 crore has been earmarked for infrastructure, as per Sitharaman. This leaves Rs 49,065.5 crore for the aircraft itself, making the cost of each aircraft Rs 591 crore.

As the final price of LCA has not yet been arrived at, it is unlikely that it will stay close to Rs 600 crore apiece calculated above. This is mainly because government itself had raised concerns over the high price of Tejas.

“The price of LCA has been the pain point of the negotiations. The government has, in fact, set up a cost committee that is looking into the issue, with our finance department officials having made multiple visits to New Delhi,” HAL sources said.

TOI had earlier reported that MoD had expressed concern over the high pricing of LCA Tejas (Mk-1A version), which will have multiple improvements over the Initial Operational Clearance (IOC) configuration of the Tejas.

The MoD did not respond to TOI’s query on whether government has committed to buying LCA at the cost indicated by the minister.